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Australia Broadband Overview

The Australian telecommunications market was deregulated in 1997. Despite the stand-off between the government and the incumbent Telstra on the issue of a regulatory holiday for new broadband infrastructure, broadband penetration is increasing in Australia. As well as speed issues, the country is experiencing some of the highest telecoms prices across the board, with small business fixed line bundles, SOHO fixed line bundles and some mobile phone plans found to be relatively high. One way of tackling this problem would be to cultivate a more competitive environment, which would require the structural separation of Telstra.

The incumbent Telstra owns the majority of Australian landline infrastructure, with Optus (a subsidiary of Singapore Telecommunications) owning the rest. Competitors often resell this, and some provide other options — such as their own ADSL networks over Telstra copper wiring with speeds up to 24 Mbps, cable networks at 30 Mbps, business fibre in city centres, and various wireless choices which are predominantly in large cities. Telstra began offering high speed broadband through its cable service in 1996. Telstra’s ISP BigPond was launched in 1996 and ADSL introduced in 2000. Both Telstra and Optus have a share in the mobile market.

Australia’s mobile market reached 100 per cent saturation in 2007. Competitive tensions between the four mobile network operators – Telstra, Optus, Vodaphone and Hutchison generates a better outcome for the end user than that in fixed services where there is little competitive pressure on Telstra’s copper network. At the beginning of 2007, Telstra had a mobile market share of 44 per cent, followed by Optus with 33 per cent. As of September 2007, Telstra has an estimated 9.3 million mobile subscribers.

In 2007, Telstra's mobile revenue growth at over 10 per cent increased its share of the market, trumping rivals Optus and Vodafone, which recently reported revenue growth of just 6.4 per cent and 3.4 per cent, respectively. Both were hit hard by a decision made by the competition regulator to cut the prices mobile network operators can charge other fixed and mobile players to connect to their subscribers. Due to its large fixed-line subscriber base, Telstra benefits from this regulatory decision.

In 2006 Telstra rolled out its NextG (3G) mobile network, significantly improving its capacity to provide broadband services to mobile devices. The launch of the NextG network has prompted rival carriers to rollout or upgrade their own 3G infrastructure. For example, early in 2007 Optus announced it would extensively upgrade its own 3G network. For some carriers, mobile broadband provides an alternative to more established broadband technologies, albeit currently at higher prices than fixed line alternatives.

Despite penetration levels exceeding 100 per cent, Australia’s mobile market recorded stronger than expected growth in 2007, thanks largely to the substantial 3G progress made by all four carriers, notably Telstra’s Next G. Telstra announced in January 2008 that for the first time, its mobile data revenue exceeded that from SMS. The Australian mobile market witnessed some important milestones in 2007, including the introduction of flat mobile data charges, the debut of 3.5G networks across the country, and the introduction of prepaid and MVNO 3G offerings.